1 00:00:02,520 --> 00:00:08,160 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I think you'd agree 2 00:00:08,160 --> 00:00:10,040 Speaker 1: that this is the place to be in Europe today. 3 00:00:10,720 --> 00:00:12,360 Speaker 2: My first I've been to Berlin many times, but my 4 00:00:12,400 --> 00:00:14,640 Speaker 2: first time at Super Return and it's wonderful to be here, 5 00:00:14,640 --> 00:00:17,479 Speaker 2: and it is It is ironic how the breadth of 6 00:00:17,560 --> 00:00:19,720 Speaker 2: players here at Super Return. It used to be really 7 00:00:19,720 --> 00:00:22,760 Speaker 2: a private equity conference and now it really is a 8 00:00:22,800 --> 00:00:25,520 Speaker 2: conference of all players in the credit markets and the 9 00:00:25,520 --> 00:00:27,160 Speaker 2: capital markets and in the equity market. 10 00:00:27,240 --> 00:00:29,479 Speaker 1: So thank you, of course, we're thrilled to hear what 11 00:00:29,480 --> 00:00:31,120 Speaker 1: you have to say. Now this is fascinating as well 12 00:00:31,160 --> 00:00:33,239 Speaker 1: because we talk about this from an Astha Coast perspective. 13 00:00:33,240 --> 00:00:34,880 Speaker 1: We'll get to that in a moment. Let's talk about 14 00:00:34,880 --> 00:00:37,320 Speaker 1: the overarching trade. We're based in London, you're based in 15 00:00:37,360 --> 00:00:40,200 Speaker 1: the US as well. We're talking a lot about whether 16 00:00:40,320 --> 00:00:43,240 Speaker 1: or not this kind of exit perhaps or at least 17 00:00:43,240 --> 00:00:45,879 Speaker 1: this moment that Europe has had in the sun actually 18 00:00:46,120 --> 00:00:48,320 Speaker 1: lasts give us the bold case for Europe here. 19 00:00:49,240 --> 00:00:51,440 Speaker 2: Well, we've been in Europe for twenty twenty five years. 20 00:00:51,440 --> 00:00:53,280 Speaker 2: We probably have one hundred billion of our eight hundred 21 00:00:53,320 --> 00:00:54,720 Speaker 2: billion here in Europe today. 22 00:00:54,840 --> 00:00:57,400 Speaker 3: And whether it's a poll. 23 00:00:57,320 --> 00:01:00,840 Speaker 2: Domestically or a push from the current administration, and there's 24 00:01:00,880 --> 00:01:05,039 Speaker 2: certainly a revitalized enthusiasm about investing in Europe. I had 25 00:01:05,040 --> 00:01:08,679 Speaker 2: at dinner last night with twenty financial players, and the 26 00:01:08,760 --> 00:01:11,560 Speaker 2: amount of US investors that are looking to invest in 27 00:01:11,600 --> 00:01:14,679 Speaker 2: Europe is very real and palpable, you know, for us 28 00:01:15,280 --> 00:01:20,440 Speaker 2: with our financing toolbox and our high grade capital solutions. 29 00:01:20,840 --> 00:01:23,440 Speaker 2: In reality, most of our transaction over the last two 30 00:01:23,520 --> 00:01:27,600 Speaker 2: years have been in Europe, Intel in Ireland, Venovia, here 31 00:01:27,959 --> 00:01:31,200 Speaker 2: in Germany and France. So you know, we've seen it 32 00:01:31,280 --> 00:01:34,120 Speaker 2: for the last few years where on the global stage, 33 00:01:34,480 --> 00:01:38,080 Speaker 2: the leaders, the national leaders in industry and energy transition 34 00:01:38,800 --> 00:01:42,759 Speaker 2: and utilities and manufacturing, they want to be competitive globally 35 00:01:42,959 --> 00:01:46,240 Speaker 2: and they're looking for more tools to be able to 36 00:01:46,280 --> 00:01:47,880 Speaker 2: play in a bigger game. 37 00:01:48,400 --> 00:01:51,160 Speaker 1: How much of that, though, is a structural ball case 38 00:01:51,160 --> 00:01:54,160 Speaker 1: for Europe as opposed to a reaction function to perhaps 39 00:01:54,200 --> 00:01:55,960 Speaker 1: the volatility emanating out of the United States. 40 00:01:56,120 --> 00:01:58,720 Speaker 2: We don't spend as much time thinking about whether it's 41 00:01:58,760 --> 00:02:01,920 Speaker 2: a pull or push on the ground when we see 42 00:02:02,000 --> 00:02:06,880 Speaker 2: activity from national champions in industry, and we see it 43 00:02:06,960 --> 00:02:10,320 Speaker 2: with industrial players, and we see it with financial players, 44 00:02:10,600 --> 00:02:14,160 Speaker 2: and we see it with government entities. Certainly in Germany 45 00:02:14,480 --> 00:02:16,799 Speaker 2: you're seeing it right now with this current administration, a 46 00:02:16,800 --> 00:02:21,480 Speaker 2: real pull. But we see palpable signs, lots of green shoots, 47 00:02:21,760 --> 00:02:25,520 Speaker 2: of great enthusiasm, and certainly there's a variety of things 48 00:02:25,520 --> 00:02:28,120 Speaker 2: you'd like to change, but for our perspective right now, 49 00:02:28,120 --> 00:02:29,680 Speaker 2: it's a wonderful place to do business. 50 00:02:29,919 --> 00:02:32,600 Speaker 1: How much of that, though, gets a stamp of approval 51 00:02:32,680 --> 00:02:34,800 Speaker 1: or a little bit of backing because the fiscal spend 52 00:02:34,800 --> 00:02:36,440 Speaker 1: from government and so, I mean it feels like Germany's 53 00:02:36,440 --> 00:02:38,720 Speaker 1: bullcase has been a big piece of that. But is 54 00:02:38,760 --> 00:02:41,160 Speaker 1: it just Germany that's kind of holding europe afloat at 55 00:02:41,160 --> 00:02:41,560 Speaker 1: the moment? 56 00:02:42,000 --> 00:02:44,600 Speaker 2: Well, I think in Germany it's very easy. This is 57 00:02:44,600 --> 00:02:47,040 Speaker 2: a four trillion economy. Their goal is to get to 58 00:02:47,040 --> 00:02:49,160 Speaker 2: be a six trillion economy over the next ten to 59 00:02:49,200 --> 00:02:52,919 Speaker 2: twelve years. We're prepared to put an over one hundred billion. 60 00:02:52,639 --> 00:02:54,520 Speaker 3: Of capital from our financing tools. 61 00:02:54,760 --> 00:02:57,520 Speaker 2: And I really say that in terms of capital, mostly 62 00:02:57,639 --> 00:02:59,880 Speaker 2: investment grade financing and a variety. 63 00:02:59,560 --> 00:03:00,680 Speaker 3: Of dancing tools. 64 00:03:00,960 --> 00:03:03,720 Speaker 2: But in Germany, because of the size and scale and 65 00:03:03,760 --> 00:03:06,640 Speaker 2: their prominence in the European marketplace. 66 00:03:06,320 --> 00:03:07,160 Speaker 3: They are a leader. 67 00:03:07,400 --> 00:03:10,520 Speaker 2: But we're seeing enthusiasm happening right now in the Nordics. 68 00:03:10,560 --> 00:03:14,440 Speaker 2: We're seeing enthusiasm happening in France to a certain degree. 69 00:03:14,760 --> 00:03:18,560 Speaker 2: Obviously different industries, but it's a palpable. 70 00:03:18,160 --> 00:03:19,680 Speaker 3: Change that we want to be part of, and I 71 00:03:19,680 --> 00:03:20,560 Speaker 3: think that for. 72 00:03:20,680 --> 00:03:23,840 Speaker 2: Our perspective, we are a large player here, but in 73 00:03:23,960 --> 00:03:28,760 Speaker 2: the world of private capital and the private credit, it's 74 00:03:28,800 --> 00:03:30,840 Speaker 2: an opportunity that we see as one of the brighter 75 00:03:30,840 --> 00:03:32,080 Speaker 2: ones around the globe. Right now. 76 00:03:32,360 --> 00:03:34,480 Speaker 1: You mentioned private credit. You took me right there. There's 77 00:03:34,520 --> 00:03:36,600 Speaker 1: a lot of concern in this market right now because 78 00:03:36,640 --> 00:03:39,120 Speaker 1: of the optimism and private markets generally, but also the 79 00:03:39,160 --> 00:03:40,960 Speaker 1: financing and the deals that are coming from the credit 80 00:03:41,000 --> 00:03:43,640 Speaker 1: space specifically. So maybe it's gone a little bit too far. 81 00:03:43,720 --> 00:03:46,960 Speaker 1: You've heard warnings echoed from some of the giants of finance. 82 00:03:47,400 --> 00:03:49,600 Speaker 1: Walk us through what a red flag might look like 83 00:03:49,840 --> 00:03:50,480 Speaker 1: in that space. 84 00:03:51,160 --> 00:03:54,680 Speaker 3: Well, we've been fortunate. We've not had a real recession in. 85 00:03:54,640 --> 00:03:59,080 Speaker 2: The US for several years, a very long period of time. 86 00:03:59,360 --> 00:04:01,800 Speaker 2: I will point out out that you know, a place 87 00:04:01,880 --> 00:04:04,920 Speaker 2: like Australia really hasn't had a recession since the early nineties, 88 00:04:05,880 --> 00:04:08,680 Speaker 2: but certainly there's been a tremendous growth of a variety 89 00:04:08,720 --> 00:04:12,720 Speaker 2: of credit markets, whether it's investment grade, high yield, direct lending. 90 00:04:13,720 --> 00:04:17,839 Speaker 2: And I think we have to differentiate between a credit 91 00:04:17,920 --> 00:04:21,160 Speaker 2: cycle and industries where there may be an overabundance or 92 00:04:21,160 --> 00:04:24,679 Speaker 2: an over enthusiasm. So certainly what's going on right now 93 00:04:24,720 --> 00:04:29,800 Speaker 2: with in DC with reimbursement, the whole area of healthcare 94 00:04:30,040 --> 00:04:32,680 Speaker 2: and medical reimbursement, you want to make sure that you 95 00:04:32,760 --> 00:04:35,760 Speaker 2: don't are not overly concentrated to anyone player or anyone 96 00:04:35,800 --> 00:04:40,039 Speaker 2: provider in the in the enterprise software business, a lot 97 00:04:40,080 --> 00:04:43,800 Speaker 2: of concern about technology change and technology innovation and light 98 00:04:43,839 --> 00:04:46,560 Speaker 2: of AI, and certainly also you want to make sure you. 99 00:04:46,520 --> 00:04:48,000 Speaker 3: Don't have a concentrated business. 100 00:04:48,000 --> 00:04:50,760 Speaker 2: So those are really red flags that would be the 101 00:04:50,800 --> 00:04:53,600 Speaker 2: case in any credit cycle, but certainly as we are 102 00:04:53,680 --> 00:04:55,359 Speaker 2: a bit long in the tooth in the cycle, you 103 00:04:55,400 --> 00:04:57,400 Speaker 2: have to be more focused on at this point in time. 104 00:04:57,600 --> 00:05:00,479 Speaker 1: You mentioned the risk out of Washington, DC specific connect 105 00:05:00,480 --> 00:05:02,520 Speaker 1: the dots force in terms of those deficit concerns out 106 00:05:02,560 --> 00:05:05,240 Speaker 1: of DC to the private credit space. How quickly do 107 00:05:05,279 --> 00:05:05,720 Speaker 1: you see an. 108 00:05:05,640 --> 00:05:08,919 Speaker 2: Effect, Well, you know, right now, while the tariffs and 109 00:05:08,960 --> 00:05:12,200 Speaker 2: Liberation Day got a lot of the headlines, the market forces, 110 00:05:12,240 --> 00:05:15,200 Speaker 2: the so called Bob Benje Lantis have woken up those 111 00:05:15,240 --> 00:05:18,000 Speaker 2: to the concern about the growing deficit in the United States. 112 00:05:18,279 --> 00:05:21,520 Speaker 2: So in the marketplace right now, with a little bit 113 00:05:21,560 --> 00:05:24,039 Speaker 2: slower growth and some concern a lot of hand ringing, 114 00:05:24,960 --> 00:05:28,080 Speaker 2: the deficit issue is taken the main stage versus the 115 00:05:28,120 --> 00:05:31,480 Speaker 2: impact of the tariffs. Now this administration, we can't get 116 00:05:31,520 --> 00:05:32,200 Speaker 2: too comfortable. 117 00:05:32,440 --> 00:05:34,279 Speaker 3: There can be a headline in the next few minutes. 118 00:05:34,320 --> 00:05:37,600 Speaker 2: It changed that, But right now the big focuses on 119 00:05:37,720 --> 00:05:41,440 Speaker 2: rates and the deficit obviously is the current administration is 120 00:05:41,440 --> 00:05:44,440 Speaker 2: focusing on their big, beautiful bill. 121 00:05:44,480 --> 00:05:46,920 Speaker 1: When it comes to kind of the folks you're speaking 122 00:05:46,960 --> 00:05:49,880 Speaker 1: to here in Berlin or around the world, how does 123 00:05:49,880 --> 00:05:53,200 Speaker 1: that sentiment you just laid out affect perhaps the nervousness 124 00:05:53,240 --> 00:05:55,560 Speaker 1: in terms of credit lending, but also kind of in 125 00:05:55,560 --> 00:05:57,440 Speaker 1: the equity space as well. Are you seeing some of 126 00:05:57,440 --> 00:05:58,760 Speaker 1: that nervousness rise. 127 00:05:58,600 --> 00:06:01,120 Speaker 3: To the top? I think there. 128 00:06:01,120 --> 00:06:03,719 Speaker 2: You know, we've been very clear about the role that 129 00:06:03,800 --> 00:06:06,760 Speaker 2: we play as a broad based capital provider, and I 130 00:06:06,800 --> 00:06:09,799 Speaker 2: think that when you see the macro headlines right now, 131 00:06:10,240 --> 00:06:13,640 Speaker 2: your calibration of risk on levered equity needs to be 132 00:06:13,680 --> 00:06:14,400 Speaker 2: a bit higher. 133 00:06:15,080 --> 00:06:17,040 Speaker 3: But at the same token, you have real rates. 134 00:06:17,080 --> 00:06:20,560 Speaker 2: You know, for four percent plus on nominal rates in 135 00:06:20,560 --> 00:06:23,080 Speaker 2: the US right now, and for our perspective as a 136 00:06:23,080 --> 00:06:25,240 Speaker 2: credit lender, you're getting paid for the first time in 137 00:06:25,240 --> 00:06:27,919 Speaker 2: the last fifteen years. So it's a wonderful time to 138 00:06:27,960 --> 00:06:30,400 Speaker 2: be a player on credit. But at the same time, 139 00:06:30,440 --> 00:06:34,480 Speaker 2: I do think there's appropriate caution with buying equity at 140 00:06:34,480 --> 00:06:36,240 Speaker 2: the bottom of a levered capital structure. 141 00:06:36,400 --> 00:06:39,039 Speaker 1: So in the public market, there's a conversation here about 142 00:06:39,640 --> 00:06:42,360 Speaker 1: holding onto cash, holding onto capital, being on the front 143 00:06:42,440 --> 00:06:44,400 Speaker 1: end of the curve to kind of have that liquidity. 144 00:06:44,760 --> 00:06:46,600 Speaker 1: Private markets offer the opposite. 145 00:06:46,640 --> 00:06:47,560 Speaker 3: It's fairly a. 146 00:06:47,520 --> 00:06:50,760 Speaker 1: Liquid it's not as easily tradable. It's a more long 147 00:06:50,839 --> 00:06:52,880 Speaker 1: duration asset with the depths of concerns. A lot of 148 00:06:52,880 --> 00:06:55,359 Speaker 1: folks are pulling out of that. Are you telling me 149 00:06:55,400 --> 00:06:57,160 Speaker 1: that that's not bubbling to the surface. 150 00:06:57,200 --> 00:07:00,800 Speaker 2: Well, I think again, private credit is is a much 151 00:07:00,880 --> 00:07:04,040 Speaker 2: broader ocean of opportunities where a lot of the things, 152 00:07:04,160 --> 00:07:06,799 Speaker 2: a lot of the issues you mentioned, they're really focused 153 00:07:06,800 --> 00:07:09,880 Speaker 2: on the non investment grade side, which is a one 154 00:07:09,920 --> 00:07:14,200 Speaker 2: point five trillion dollar marketplace of direct lending. The larger 155 00:07:14,240 --> 00:07:17,240 Speaker 2: opportunity when we're more focused as a firm and three 156 00:07:17,280 --> 00:07:20,080 Speaker 2: quarters of our assets are on the investment grade side, 157 00:07:20,400 --> 00:07:24,400 Speaker 2: so a different setup with regard to the underlying credit metrics, 158 00:07:25,160 --> 00:07:29,440 Speaker 2: mostly investment grade, mostly top of the capital structure, and 159 00:07:29,480 --> 00:07:32,400 Speaker 2: with rates are where they are right now. Again, people 160 00:07:32,400 --> 00:07:35,680 Speaker 2: don't tep typically buy spreads, but they buy yields and 161 00:07:35,720 --> 00:07:40,160 Speaker 2: reels yields are quite strong right now, so appropriate commentary 162 00:07:40,200 --> 00:07:43,800 Speaker 2: and concern about the non investment grade marketplace, and certainly 163 00:07:43,800 --> 00:07:47,800 Speaker 2: a lot of concern about levered capital structures, subordinated paper 164 00:07:48,320 --> 00:07:51,040 Speaker 2: pick payments and things of that nature which we've avoided. 165 00:07:51,720 --> 00:07:55,160 Speaker 2: We're clearly leading massively into the investment grade side of 166 00:07:55,200 --> 00:07:58,080 Speaker 2: the world of private capital. And I would say also 167 00:07:58,120 --> 00:08:00,680 Speaker 2: in the past a lot a lot of the issues 168 00:08:00,680 --> 00:08:03,880 Speaker 2: you brought up in the past, Historically private has been 169 00:08:04,160 --> 00:08:07,400 Speaker 2: risky and in liquid and public has been safe and liquid. 170 00:08:07,800 --> 00:08:09,120 Speaker 3: We would really challenge that 171 00:08:09,200 --> 00:08:11,760 Speaker 2: Convention, and we're seeing it more and more on these 172 00:08:11,800 --> 00:08:15,000 Speaker 2: investment great opportunities that we've been a leader and owner 173 00:08:15,040 --> 00:08:15,120 Speaker 2: of